FOR IMMEDIATE RELEASE
Thursday, June 30, 2016

Billion-Dollar Sports Gambling Ring Dismantled; Four Defendants from California and New York Charged with Enterprise Corruption

Operation Led by Self-Proclaimed Internet Gambling “Innovator” who owns more than 20 Houses;
Took in over $900 Million in Wagers on NFL Games during last Football Season Alone

Brooklyn District Attorney Ken Thompson today announced that four individuals have been variously charged in a 57-count indictment with running a massive Internet-based sports gambling ring that operated all over the United States and controlled an offshore office. The billion-dollar operation allegedly catered to thousands of bettors, accepted $927 million in wagers on NFL games during the 2015 season alone and disbursed up to $200,000 per month to maintain its “wireroom” in San Jose, Costa Rica. The alleged California-based ringleader had boasted about innovating online gambling and used a variety of methods to launder millions of dollars.

District Attorney Thompson said, “Illegal gambling is not a victimless crime – it preys on peoples’ vulnerabilities and directly leads to money laundering, loansharking and a host of other crimes. The principals of this huge gambling operation – possibly the biggest one ever to be dismantled by a local prosecutor’s office – allegedly moved millions of dollars around the United States and the world and used various tactics to launder these proceeds. My Office’s diligent and long-term investigation has now put an end to this criminal enterprise and we intend to see that these defendants face justice here in Brooklyn.”

The defendants are variously charged in a 57-count indictment with enterprise corruption, first-degree promoting gambling, second-degree possession of gambling records and fifth-degree conspiracy. They face up to 25 years in prison if convicted of the top count with which they are charged.

Additional arrests are expected as part of the investigation.

The District Attorney said that, according to the indictment, between April 10, 2015 and June 9, 2016, the defendants were part of an illegal enterprise headed by Mitchnick, who controlled a series of Internet sports gambling sites, including www.wagerabc.com, www.thewagerspot.com and www.hustler247.ag, all of which required password-protected access. According to the evidence, Mitchnick bragged about being one of the first bookmakers to use the “pay per head” system of online-based gambling that largely replaced payments by percentage of profits and also indicated that he was running an illegal operation.

It is alleged that his enterprise accepted wagers from thousands of bettors on various professional and collegiate sporting events, including football, basketball, baseball, hockey and soccer. During the NFL season, which is the peak gambling period, the operation took in some $927,000,000 in wagers on NFL games played during the 2015 season, the investigation revealed. Bets were placed directly over the Internet or by calling various toll-free numbers associated with the above-mentioned websites.

Mitchnick allegedly employed a staff in San Jose, Costa Rica to run the operation’s main office, or “wireroom,” and communicated with them regularly through e-mail, text messages and WhatsApp. The enterprise offered a variety of services to Master Agents and Agents and accommodated a variety of service and fee arrangements, depending on need and customer base. The largest clients were offered a flat rate, mid-size and smaller clients were offered a “pay per head” fee that was charged per active betting account per week, and selected clients paid a percentage of profits derived from their betting customers.

The operation required a large and steady cash flow to maintain operating expenses, such as rent, salaries, travel, hardware and software development. During peak betting season, these expenses came out to about $200,000 per month, according to the indictment. The enterprise used a variety of methods to allegedly launder its payments and proceeds, including transporting, transmitting and transferring of cash, electronic wire transfers and other financial transactions. For instance, the investigation found that Mitchnick had purchased over 20 houses as a means to launder gambling proceeds. To maximize profits, the enterprise relied on economy of scale and consistently solicited new clients of all sizes through word of mouth and the Internet website www.allourwebsites.com, which showcases sports gambling pages.

Schneider allegedly consolidated his own independent operation with Mitchnick’s enterprise in April 2015 and subsequently paid a monthly fee to use its websites, including www.thewagerspot.com. During peak betting season, the fee was approximately $30,000 per month. Schneider managed and controlled numerous Master Agents and Agents, each with his own set of clients, who paid him on a “per head” basis. Rossi was allegedly another Master Agent who used the websites maintained on Mitchnick’s servers and controlled a series of Agents. Both of these defendants participated in laundering payments and proceeds, according to the indictment.

Ferguson was allegedly a “runner” who collected money from, held money for and distributed money among the participants of the illegal enterprise. He also participated in money laundering. On at least one occasion, he traveled between U.S. airports with a suitcase filled with over $50,000 in cash, according to the investigation.

Among other places, the Mitchnick-led enterprise operated in Brooklyn, giving the Brooklyn District Attorney’s Office jurisdiction for a criminal prosecution.

District Attorney Thompson thanked the following agencies for their assistance in the investigation: the Los Angeles County Sheriff’s Department, the Los Angeles County District Attorney’s Office, the Nevada Gaming Control Board – Enforcement Division – Special Investigations and Intelligence Unit, the Kings County District Attorney Squad of the New York City Police Department, the New York State Troopers, Office of the Monmouth County Prosecutor in New Jersey, the U.S. Postal Inspector and the U.S. Department of Homeland Security.

The case was investigated by Detective Investigator John Mullen, case officer, with the assistance of Detective Investigators Brad Miller, Frank Garguilo, John Beale, Loretta Rolon, and other Detective Investigators from the District Attorney’s Special Investigations Unit, under Supervising Detective Investigator Michael Seminara, Supervising Detective Investigator Thomas Farley and Deputy Chief Edwin Murphy, and the overall supervision of Interim Chief Investigator Joseph Piraino.

Senior Assistant District Attorney John Genovese of the District Attorney’s Asset Forfeiture and Crimes Against Revenue Bureau, Gregory Mitchel, Bureau Chief, Supervising Financial Investigator Susan Ryan and Financial Investigators Juel Fenty and Veronica Beltran, also of the Asset Forfeiture and Crimes Against Revenue Bureau, assisted in tracing assets.

The case is being prosecuted by Assistant District Attorney Robert Basso, Senior Assistant District Attorney Nicholas Batsidis and Assistant District Attorney Theresa Robitaille of the District Attorney’s Organized Crime and Racketeering Bureau, under the supervision of Assistant District Attorney Christopher Blank, Bureau Chief, and the overall supervision of Executive Assistant District Attorney William E. Schaeffer, Chief of the District Attorney’s Investigations Division and Assistant District Attorney Patricia McNeill, Deputy Chief.

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An indictment is an accusatory instrument and not proof of a defendant’s guilt.